| Commonly, a subsidy is deemed to a transfer payment that by administrative means, government provides to the manufacture, circulation and commercial activity of some products or certain people. However agricultural subsidies direct mainly at the manufacture, circulation and commercial activity of agriculture products. In other words, it is to realize the income object of the agriculture industry that government provides subsidies to farmers from the government budget. As we all know, agriculture has the defect of easy being influenced by the natural environment, at the same time, it is politically or economically vital to a nation, so most countries in the world adopt the means of subsidy to make advocacy for or work toward protecting agriculture. But for a long time, it has influent the development of international trade because of no rules for subsidy. It has twist and damaged the interest of the various countries of trade. So, through hard negotiation, during the multilateral trade negotiation of Uruguay Round of GATT, they have reached Agreement on Agriculture. It standardizes various kinds of agricultural protective measures that various countries implement. In order to lighten the side-effect of agricultural subsidy, Agreement on Agriculture of Uruguay set a frame work that decided to make a gradually restrain on agricultural subsidies. The multilateral trading system would be protected and promoted when every WTO party should comply with the regulation of WTO automatically. But some parties'subsidy programs for agriculture did not completely comply with the regulation of WTO, Such as that of EU and US. They disobey their promise, which is the reason of the case of the US– subsidies on upland cotton. US Cotton Subsidies was an overwhelming victory for Brazil–both in terms of the panel and in terms of Appellate Body findings. Brazil's victory was also a victory for developing countries which suffer injury by agriculture subsidy. Meanwhile it gave some countries with the caution and compelled them to change their own agriculture policy. Additionally, Doha Round's failure had people think more about the area of agriculture subsidies. Perhaps there are no many people know how the agriculture subsidies under the WTO is. In this dissertation, tentative analysis is made to this frontier subject on the basis of present theoretical and practical achievement.Part one outlines the agriculture subsidy under WTO. This part mainly expound how the agricultural subsidy rules of WTO came into being, the content of the agricultural subsidy, and analyzes the impact of agricultural subsidy on world welfare. This section, which makes outline in background knowledge for the following text, forms a basis of the whole article. During the GATT, Kennedy Round and Tokyo Round once had negotiation about the issue of the agriculture products, but they were both defeated. On December 15, 1993, the Agreement on Agriculture finally came forth. It took agriculture into global system of trade legal documents. Each party was the first-time to commitment to reduce export subsidies, domestic support and import tariff in order to form the agricultural product trades system facing the market. Although Doha Round was failure, it came to Framework of Agriculture Product agreement and Hong Kong Ministerial Declaration, which made a little progress in agriculture talks. Agriculture subsidies can be sorted into two kinds: export subsidies and domestic support. Agreement on Agriculture definitely ordains the regulations of domestic support. Economist Kym Anderson estimates that, if the Doha Round results in a 50% liberalization of trade barriers, resulting long-term global benefit measured in net present value in 2005 would exceed $22 billion. He also found that, of the economic welfare gains to be achieved from completely eliminating barriers to trade, nearly 65% of such gains would come from the agriculture and food sectors alone. In other words, even after the Uruguay Round, the agriculture sector remains significantly distorted by subsidy and tariff policies. Although reducing agricultural subsidies is only part of what is needed to achieve liberalization (market access being the other part).Part two describes cotton subsidy programs in the US in detail. The United States is a big agriculture country. Not only it is the most flourishing country in agriculture all over the world, but also it protects its agriculture strongest by law. Cotton has become a symbol of great volume of US subsidies. In crop year 2002, the US government provided $3.4 billion in total subsidies to the cotton sector. To put this figure into perspective, it is nearly twice the total US foreign aid given to sub-Saharan Africa. It is also more than the GDP of Benin, Burkina Faso, or Chad, the main cotton–producing countries in the region. US subsidies have led to depressed world cotton prices, which in turn have cost cotton–producing countries millions of dollars in lost export earnings and make poverty for millions of farmers in Africa. Since 1993, American has issued over ten agricultural acts. The agricultural act of 1985 pushed marketing reform on agriculture products. In 2002, Agriculture Security and Rural Investment Act of 2002 was sanctioned, which increased the subsidies for agriculture greatly, and the amount of subsidies reached the highest level in history. Compared with the former agriculture acts, 2002 Act enlarged the range of agricultural products to be subsidized, raised the subsiding standard. presently, US cotton subsidies mainly include Marketing loan payments,direct payments,counter-cyclical payments,crop insurance,export Credit Guarantee and Step 2 payment.Part three provides the background to the US Cotton Subsidies decision, outlines the rules governing agriculture subsidies under the Agreement on Agriculture and the WTO Agreement on Subsidies and Countervailing measures as well as the major findings of the panel, summarizes the Appellate Body decision that upheld these major findings, and considers the apocalypse and likely impact of the decision. On September 27, 2002, Brazil requested consultations in US Cotton Subsidies, having no outcome. Then Brazil requested establishment of panel in US Cotton Subsidies on February 6, 2003. Dispute Settlement Body (DSB) accepted this requisition and established the panel to exam the coherence of US cotton subsidies and the WTO rules. On March 21, 2005, Appellate Body report issued and adopted by DSB. Both the Panel report and the Appellate Body report upheld most of Brazil's claim. The four most significant findings of the panel were: (i) Step 2 payments to users and exporters of US-grown cotton constitute prohibited subsidies; (ii) export credit guarantees to exporters of cotton and other commodities constitute prohibited subsidies; (iii) the peace clause is not a bar to Brazil's challenge of US domestic support to upland cotton producers; and (iv) US domestic support measures caused significant price suppression in the world cotton market during the years in question and therefore caused 'serious prejudice' to the interests of Brazil. The US Cotton Subsidies dispute not only is of enormous practical significance, but it also presented many novel legal issues to WTO dispute settlement. US Cotton Subsidies was an overwhelming victory for Brazil -- both in terms of the panel and in terms of Appellate Body findings, which in all significant respects were in Brazil's favor. Brazil's victory was also a victory for developing countries that injured by rich-country subsidies. Compelled by the external pressure and the internal voice of reform, EU firstly stated to accept the advice to reduce export subsidies, but the time needed to negotiate. For urging the EU to cancel export subsidies and maintaining the legitimacy of its own domestic support to agricultural products such as cotton, The US government indicated that it intends to comply with the WTO decision, although the exact time frame for full implementation is uncertain. On 30 June 2005, the USDA implemented several administrative changes to export credit guarantee programs to comply with the WTO panel's recommendation that these programs be brought into compliance by 1 July 2005. |
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